🌐 The Bank for International Settlements Proposes a Hybrid Digital Currency Model to Optimize CBDC Deployment and User Interaction
The Bank for International Settlements (BIS) recently announced a comprehensive framework for designing retail central bank digital currencies (CBDCs) -- the Hybrid Retail Central Bank Digital Currency (CBDC) model, which aims to organically combine the regulatory functions of central banks with the role of the private sector.
This hybrid model is managed by central banks for the issuance of digital currencies and the construction of the infrastructure, while private intermediaries are responsible for direct interactions with users, such as KYC verification, wallet management, and transaction processing. This ensures both efficiency and scalability while also addressing privacy and anti-money laundering regulations.
The architecture includes four core processes: user registration, digital currency issuance, withdrawal, and transfer. Moreover, it supports a tiered KYC mechanism, allowing low-value transactions to use basic wallets, while high-value transactions require stricter regulation.
Another highlight of this architectural model is the offline payment function, which is good news for unbanked populations, as payment channels will be greatly expanded.
The BIS report also mentions that CBDCs can bring advanced features such as programmability through smart contracts, asset tokenization, and seamless integration with DeFi. These features can enhance liquidity, automate transactions, and make CBDCs a cornerstone of modern economic operations.
The report also references some global experiences, such as China's digital yuan and Peru's offline pilot projects in rural areas, which are exemplars of technological application and innovation.
However, there are challenges in implementing this, such as how to ensure compatibility between this digital currency and the payment systems we currently use, how to protect our privacy without violating regulations, and how to guard against online attack threats.
Nonetheless, the Bank for International Settlements emphasizes that this proposal is also a flexible framework, intended to encourage discussion and gather ideas and opinions from everyone.
💬 What are your views on the development prospects of the hybrid digital currency model? What expectations do you have for the real-world applications of CBDC in the future financial world?